Yield Rises as Investors Trim Nigerian Treasury Bills Holding
The average yield on Nigerian Treasury bills climbed near 25% in the secondary market due to sell pressures on naira assets amidst economic uncertainties. The fixed income market exhibited a generally muted trend, with mixed sentiments prevailing despite ample liquidity within the financial system, traders said in a note.
With real return widening to 7.3%, inflation (34.80%), and the interest rate benchmark (27.50) are expected to rise further in the short term but at a slow pace amidst a plan to rebase Nigeria’s consumer price index in 2025.
Analysts said investors appeared to show indifference to current yield levels as they anticipate an upcoming OMO auction, with expectations of higher spot rates as investors price in a higher inflation rate across financial markets. In its note, AIICO Capital Limited said there was a discernible demand for longer maturities, especially for the bills maturing in December 2025 and January 2026.
The 4-Dec maturity experienced the biggest increase in yield, rising by 72 basis points, while January bills attracted the most demand, TrustBanc Financial Group Limited added in a note. Demand was seen across the curve, but this was offset by selloffs on selected papers at the long end, separate analysts said in their respective market updates.
Across the curve, the average yield contracted at the short (-2 bps) and mid (-2 bps) segments following the demand for the 86-day to maturity (-2 bps) and 177-day to maturity (-2 bps) bills, respectively, Cordros Capital Limited said in a note.
Overall, the average benchmark yield advanced by 4 basis points to close at 24.96%. However, yield expanded at the long (+3 bps) end due to the sell-off of the 310-day to maturity (+72 bps) bill. Conversely, the average yield contracted by 52 basis points to 27.5% in the OMO bills segment. CBN Opens FX Window for BDC to Stock up at NFEM Rate
